Saturday, September 27, 2008

Cuba's ambitions for growth laid to waste

Cuba's ambitions for growth laid to waste
By Marc Frank in Havana
Published: September 16 2008 03:00 | Last updated: September 16 2008 03:00

Just six months after President Raúl Castro officially took over from
his ailing brother Fidel, two destructive hurricanes have left in ruins
his promises to improve people's "material and spiritual lives".

In two short weeks hurricanes Gustav and Ike have left catastrophic
destruction at both ends of the island, and ravaged most of what lies in

Strains were already appearing in Cuba's import-dependent economy before
the storms. The government slowed investment and stopped debt payments
to some countries and suppliers over the summer, asking for them to be
restructured after the rise in fuel and food prices and a significant
decline in nickel prices, the main export.

The communist-ruled island, under an economic embargo imposed by the US
more than 40 years ago, is not a member of the International Monetary
Fund, World Bank or any other multilateral lending institution with a US

"Material improvement was planned to be a key source of legitimacy of
the Raúl government, and if he can't deliver on this - for whatever
reason - this is a much more serious political problem for his rule than
it would have been for Fidel," said Bert Hoffman, a Latin American
expert at the German Institute of Global and Area Studies.

It has been the "retired" Fidel Castro, 82, who has been rallying Cubans
to "battle" in a series of columns and messages.

According to the elder Castro, who is consulted on policy but has not
been seen in public in more than two years after undergoing surgery,
Venezuela's President Hugo Chávez, the government's leading ally, has
taken "measures that make up the most generous gesture of solidarity
that our country has known".

For the first time the Communist party has allowed UN emergency relief
and broad support from western non-government organisations. Aid is
coming from dozens of countries, with estimates for the storm damage at
many billions of dollars.

US aid has been mired in the bitter 50-year confrontation between the
two countries, with Washington demanding the right to inspect damage and
Cuba countering that it simply wants to buy emergency supplies and
receive private credit for food purchases, and that restrictions on
Cuban-American travel and remittances should be lifted.

Raúl Castro has stayed behind the scenes and, apparently busy on the
phone since the crisis began, has sent Ramón Machado Ventura, his
second-in-command, and other top officials to survey damage and rally
recovery efforts.

There will be no more talk for now of pay rises and lower prices,
building 50,000 new houses a year, lowering food prices and substituting
10 per cent of soaring food imports in 2009 when he next addresses the

"We need to save and use to rebuild everything salvageable, including
the nails," urged Mr Machado Ventura as he toured Cuba. The hurricanes
have damaged some 500,000 homes and many thousands of other buildings,
as well as utilities and the communications infrastructure, and wiped
out crops.

In an effort to boost output, Raúl Castro has decentralised the agriculture

sector, increased what the state pays for produce and granted a little
more autonomy and state lands to farmers. Caps on wages have also been
lifted in the hope of improving manufacturing.

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